The IMF says that the advance of the Moldovan economy will be equal to zero, driven by a contraction in investment and a slowdown in the growth of private consumption amid the erosion of the purchasing power of incomes due to the high level of inflation.
GDP is forecast to continue moderate growth of 2.3% in 2023, supported by a recovery in investment and net exports. Growth is expected to pick up over the medium term, supported by strong gains from reforms that promote faster capital accumulation and productivity.
However, the real economy will be affected in the medium term, reflecting prolonged war-induced disruptions, with real GDP around 7% below the pre-war forecast for 2026.
Average annual inflation is expected to reach 28.5% in 2022, driven by further increases in food and energy prices, depreciation pressures and energy tariff adjustments. Inflation is likely to peak around October-November before easing towards the end of the year and reaching 13.8% in 2023, on the assumption that commodity prices should begin to rise and partially normalize from the fourth quarter of 2022. Pressures on the food chain are expected to ease as trade disruptions ease and alternative sources of supply are identified.
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However, the staff expects inflation to remain well above the NBM’s target range until the end of 2023.
Risks in the energy field. A sharper-than-expected rise in energy prices. Moldova’s energy security remains at risk of interruption or reduction in natural gas or electricity supplies, given the country’s dependence on supplies from Russia and the separatist region – Transnistria. Risks to food security and affordability may also increase as the war drags on. An escalation of the war would exacerbate refugee flows to Moldova, putting further pressure on the budget, while funding conditions are tight. Governance is threatened by social unrest, rising costs of living and political discontent with policy decisions.
Recently, the IMF approved the disbursement of USD 27 million from the assistance program that the Republic of Moldova has with the fund.